Chap 9

Question 1

Bank Reconciliation Statement

Answer 1

a statement that accounts for all differences between the balance on the bank statement and the book balance of cash.

Question 2

Blank Endorsement

Answer 2

a signature of the payee written on the back of a check that transfers ownership of the check without specifying to whom or for what purpose.

Question 3

Bonding

Answer 3

the process by which employees are investigated by an insurance company that will insure the business against losses through employee theft or mishandling of funds.

Question 4

Canceled Check

Answer 4

a check paid by the bank on which it was drawn.

Question 5

Cash

Answer 5

in accounting, currency, coins, checks, money orders, and funds on deposit in a bank.

Question 6

Cash Payments Journal

Answer 6

a special journal used to record transactions involving the payment of cash.

Question 7

Cash Receipts Journal

Answer 7

a special journal used to record and post transaction involving the receipt of cash.

Question 8

Cash Register Proof

Answer 8

a verification that the amount of currency and coins in a cash register agrees with the amount shown on the cash register audit tape.

Question 9

“Cash Short or Over” Account

Answer 9

an account used to record any discrepancies between the amount of currency and coins in the cash register and the amount shown on the audit tape.

Question 10

Check

Answer 10

a written order signed by an authorized person instructing a bank to pay a specific sum of money to a designated person or business.

Question 11

Credit Memorandum

Answer 11

a form that explains any addition, other than a deposit, to a checking account

Question 12

Debit Memorandum

Answer 12

a form that explains any deduction, other than a check or other electronic payment transaction, from a checking account.

Question 13

Deposit in Transit

Answer 13

a deposit that is recorded in the cash receipts journal but that reaches the bank too late to be shown on the monthly bank statement.

Question 14

Deposit Slip

Answer 14

a form prepared to record the deposit of cash or checks to a bank account.

Question 15

Dishonored Check

Answer 15

a check returned to the depositor unpaid because of insufficient funds in the drawer’s account; also called NSF

Question 16

Drawee

Answer 16

the bank on which the check is written

Question 17

Drawer

Answer 17

the person or firm issuing a check

Question 18

Electronic Funds Transfer

Answer 18

EFT; electronic transfer of money from one account to another

Question 19

Endorsement

Answer 19

a written authorization that transfers ownership of a check.

Question 20

Full Endorsement

Answer 20

a signature transferring a check to specific person, firm or bank.

Question 21

Negotiable

Answer 21

a financial instrument whose ownership can be transferred to another person or business.

Question 22

Outstanding Checks

Answer 22

checks that have been recorded in the cash payments journal but have not yet been paid by the bank.

Question 23

Payee

Answer 23

the person or firm to whom a check is payable

Question 24

Petty Cash Analysis Sheet

Answer 24

a form used to record transactions involving petty cash.

Question 25

Petty Cash Fund

Answer 25

a special-purpose fund used to handle payments involving small amounts of money.

Question 26

Petty Cash Voucher

Answer 26

a form used to record the payments made from a petty cash fund

Question 27

Postdated Check

Answer 27

check dated some time in the future

Question 28

Promissory Note

Answer 28

a written promise to pay a specified amount of money on a specific date.

Question 29

Restrictive Endorsement

Answer 29

a signature that transfers a check to a specific party for a stated purpose

Question 30

Service Charge

Answer 30

a fee charged by the bank to cover the costs of maintaining accounts and providing services.

Question 31

Statement of Account

Answer 31

a form sent to a firm’s customers showing transactions during the month and the balance owed.